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November 8, 2024

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Report Shows Wide Range of Data Center Demand Scenarios for Virginia

Growing demand from Northern Virginia’s Data Center Alley could outpace the power industry’s ability to keep up, according to a report released June 20 by Aurora Energy Research.

PJM’s latest 2024 forecast shows 11 GW of demand from new data centers in Northern Virginia alone by 2030, which would represent 40% of Virginia’s peak demand. In the report “Impacts of Virginia data center demand growth on the power system,” Aurora says data center demand could reach as much as 16 GW by the end of the decade.

New supply would be needed to meet such demand, which the report said could drive up to 15 GW of new natural gas capacity because intermittent renewables alone would not provide the reliability that PJM market rules require. Dispatchable resources such as natural gas or battery storage would be needed to reliably serve new data center load, according to Aurora.

The need for new supply could affect data center demand growth, with the report noting new plants take years to get through PJM’s interconnection process and connect to the grid. Relatively high power prices in Virginia and increasing geographic flexibility from data centers could drive them to be built elsewhere.

“Adding the 10 to 15 GW of firm generation capacity needed to supply these data centers and keep the lights on in Virginia will not be easy,” Aurora’s PJM Research Lead Zachary Edelen said in a statement. “It can take three to four years for the transmission organization just to greenlight a new generator, and market prices are currently too low for developers to build the kind of capacity required.”

Renewable capacity grows significantly in PJM under all of Aurora’s scenarios, which forecast a minimum of 40 GW of new nameplate capacity in the region. But renewables are credited well short of their nameplate capacity in PJM’s capacity market and that along with data centers’ need for steady power supplies lead to more need for natural gas plants and batteries.

“As a result, our analyses consistently show that data centers bolster the business case for natural gas generators, meaning state and federal governments will need to do more if they want to decarbonize,” Edelen said.

Northern Virginia’s Data Center Alley is home to 25% of national data center load. Its 4 GW of demand beat that of every country except the U.S. itself and China. Nearly 300 data center facilities are in Northern Virginia, with a cluster around Data Center Alley in Ashburn, according to the report.

Growth was so fast there that Dominion Energy had to pause new connections in 2022 to avoid spiking congestion. Now the utility is implementing grid updates to deal with the bottleneck. Dominion expects 20 GW of new load and plans to invest nearly $5 billion in transmission to deal with that, according to the report.

Data centers are considering behind-the-meter generation as they work to improve efficiency in their operations in the face of high electricity costs in Northern Virginia, according to the report, which also noted the centers increasingly can locate elsewhere as internet connections improve.

Aurora’s demand forecasts range from 10 to 37 GW by 2040; a 24-GW growth scenario is in line with PJM’s load forecast.

Dominion forecasts 11 GW of additional capacity obligations for its footprint by 2030 and plans to buy and import about 59% of that from around PJM. Its transmission spending plans will help enable that.

The RTO will need more capacity to meet the Virginia data center demand because of planned retirements. Aurora forecasts a 12-GW shortfall in “unforced capacity,” which would take 15 GW of new gas plants, or 20 GW of batteries if they hold four hours of charge.

The higher demand is expected to help push up power prices, with the forecast closest to PJM’s adding $3/MWh to the average, but the extreme case of 37 GW by 2040 would add $16/MWh.

Data centers building their own generation could put a cap on how high their new demand drives wholesale prices, the report noted. A combined cycle gas turbine would make sense for big data centers if the generator’s capacity factor is high enough, which would be the case at average data centers that have a load factor of 88%, according to the report.

“A strategy of building one’s own behind-the-meter generation carries risks, including necessitating a long generator lifetime to realize benefits, policy risk (from potential decarbonization rules), outage risk and potential local pushback from neighboring residents,” Aurora said in the report.

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CAISO Kicks off Stakeholder Process for Pathways Initiative

CAISO on June 18 kicked off the West-Wide Governance Pathways Initiative stakeholder process required to shift the ISO’s governance structure to an independent entity within the Extended Day-Ahead Market (EDAM).  

During a conference call, members of the initiative’s Launch Committee presented Step 1 of the “stepwise” approach, which would elevate the “joint” authority over both the EDAM and the Western Energy Imbalance Market that the latter’s Governing Body shares with CAISO’s Board of Governors to “primary” authority. This means the body would be the first to vote on tariff change proposals for both markets. 

The moves are meant to quell fears about the ISO’s state-run governance structure. (See Pathways Initiative to Act Fast on ‘Stepwise’ Governance Plan.) California’s governor appoints members of the ISO’s board, on which the State Senate votes to confirm. 

The stepwise approach was outlined in a straw proposal released June 5. 

“We’re looking to create a structure that can enable the largest footprint possible and include California,” said Kathleen Staks, WWGPI co-chair and director of Western Freedom. “We ultimately want this entity to be able to evolve and add market services up to and including a full regional transmission organization.”  

The first round of stakeholder feedback led Launch Committee members to highlight a focus on respecting state and local authority in the initiative, “ensuring we are creating a structure that respects each individual state’s ability to set and enforce its own energy policies,” Staks said. “We are not looking to create something that is going to enable one state to force its policies on another state and vice versa.” 

Over the summer, committee members and stakeholders will be working on a proposal for Step 2, which would establish a “regional organization” as a legal entity and, after passage of required California legislation, transfer the Governing Body’s primary authority to “sole” authority. 

Stakeholder Comments

Some stakeholders expressed concern that the initiative still doesn’t achieve the level of independence needed to quell concerns surrounding CAISO’s governance structure. 

“We appreciate steps forward with the Step 1 proposal to extend [Federal Power Act Section] 205 filing rights and primary authority to the WEIM Governing Body,” said Doug Marker, intergovernmental affairs specialist at Bonneville Power Administration. “But at the same time, as we’ve said, we don’t believe that it by itself achieved the level of independence from any one state’s authority that’s necessary for a regional market. 

“What we’re concerned about is that transition to primary authority could lead to the CAISO Board of Governors being disconnected from WEIM and EDAM issues and possibly increased conflict between the Board of Governors and the WEIM Governing Body.” 

Marker requested that the committee consider elements that could be added to the proposal that could support continued collaboration between both entities.  

“We have a number of [Governance Review Committee] members … who are aware of the perceived and, I think, real value of the increased collaboration that happened moving to the joint authority model,” responded Spencer Gray, committee members and executive director of the Northwest & Intermountain Power Producers Coalition. “While we didn’t touch on the mechanics of whether the two bodies would continue to be jointly going forward, we certainly didn’t want to preclude that approach.” 

A second stakeholder call is tentatively set for July 23. 

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MISO Readies JTIQ Filings, Hints at More Tx Portfolios with SPP

Two years after announcing its $1.8 billion Joint Targeted Interconnection Queue (JTIQ) transmission portfolio with SPP, MISO is putting final touches on its FERC filings to make it happen.  

During a June 18 teleconference to outline its plan, MISO’s Milica Geissler said the RTO will begin making filings to FERC at the end of July, starting with an addition that chronicles JTIQ procedure for its joint operating agreement with SPP. Subsequent filings on cost allocation, generator interconnection agreements and rate schedules will follow, Geissler said, and may be standalone or combined. All filings concerning JTIQ will seek a common effective date, she added.  

MISO said it will work with its transmission owners to make the later filings. SPP similarly is finalizing JTIQ details. (See SPP Board Adds Final OK to JTIQ Cost Framework.)  

“We’ve been working on this for four years, and we’re finally able to present a full package,” MISO Director of Resource Utilization Andy Witmeier said, referencing the 2020 announcement that MISO and SPP would try a new approach to interregional planning after years of unsuccessful pursuits for transmission prospects.  

MISO counsel Chris Supino said the JTIQ process — which will replace MISO and SPP’s affected-system studies — will allow generation developers to learn their cost responsibility earlier and get projects connected sooner.  

Supino said the first portfolio represents the most “immediate need for beneficial, backbone projects” along the MISO Midwest and SPP seam. He said MISO may focus on MISO South for its next JTIQ portfolio with SPP.  

Witmeier said the first portfolio should dramatically decrease the costs of getting generation online near the seam. He said a recent SPP affected-system study returned $1.4 billion in network upgrades for just 8 GW of projects connecting in MISO. On the other hand, Witmeier said the $1.8 billion JTIQ is expected to enable 28 GW in generation additions.  

MISO and SPP are pursuing a 100% cost allocation to interconnection generation. The two initially planned to use a split entailing 90% to generators and 10% to load, but they abandoned the approach after the Department of Energy announced the portfolio would receive $464.5 million from the department’s Grid Resilience and Innovation Partnership program. (See MISO, SPP Ditch 90/10 JTIQ Allocation After $465M DOE Grant.) MISO and SPP’s load will act as a temporary cost backstop for their share of JTIQ costs until enough new generation commits to the lines and picks up the tab for construction.  

Geissler said it’s unlikely that load will have to cover any JTIQ costs permanently because of the sheer numbers of prospective projects in MISO’s and SPP’s interconnection queues. However, construction may begin on the JTIQ projects before they’re fully subscribed. MISO said it will consider JTIQ portfolios fully subscribed when 85% of the megawatts they can enable are spoken for. For the first JTIQ portfolio, that subscription threshold will be a little more than 24 GW in generation projects.  

Witmeier added that MISO load should benefit from lower congestion costs and decreased market-to-market payments once JTIQ projects are built.  

SPP’s interconnection queue boasts 412 projects totaling more than 84 GW; MISO’s interconnection queue could approach 350 GW, if all the 123-GW 2023 class of queue applications are allowed to proceed. (See MISO Reports 123-GW Roster for 2023 Interconnection Queue Cycle.)  

“The existing system was not designed to handle this level of generation,” Supino said.  

MISO expects to begin accounting for JTIQ projects in its generator interconnection queue study modeling next year, after the RTOs’ boards approve the JTIQ portfolio.  

MISO and SPP plan to study generation projects that may rely on JTIQ projects in clusters. MISO said it will screen projects and move those dependent on JTIQ into a “participation group.” Generation projects will enter a “commitment group” once they close in on generator interconnection agreements and will be assessed a per-megawatt JTIQ charge that is billed directly by either MISO or SPP.  

Sustainable FERC Project attorney Lauren Azar asked if MISO is planning to change JTIQ rules to integrate changes stemming from FERC’s recent show-cause order issued to MISO and three other RTOs. The commission last week put the grid operators on notice that their policies allowing transmission owners the opportunity to provide initial funding for network upgrades may impede interconnection customers’ right to finance the upgrades they pay for. (See FERC Issues Show-cause Order on TO Self-funding in 4 RTOs.)  

“That’s something we’re still evaluating,” Supino said. “We’re still going to have to determine how this impacts it.”  

But Supino said that unlike normal upgrades that transmission owners can elect to self-fund, the JTIQ involves large projects that are prebuilt by transmission owners assigned by MISO or SPP.   

“I’m not certain it’s going to raise the same questions,” Witmeier said. 

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FERC Accepts Results of New England Capacity Auction

FERC accepted the results of ISO-NE’s Forward Capacity Auction 18 on June 18, finding that the auction was run according to the RTO’s tariff and that protests submitted by climate activists were outside the scope of the proceeding (ER24-1290).  

FCA 18, which was held in February and relates to the 2027/28 capacity commitment period (CCP), saw an approximately 40% increase in the cost of capacity relative to the previous auction, along with a rise in renewable resources. (See Prices, Renewables Rise in New England Capacity Auction.) 

The auction likely marks the last auction held prior to the implementation of major changes to ISO-NE’s capacity market.  

The RTO is amid a multiyear process reworking how it calculates resource capacity values, and also is pursuing significant changes that would split the annual CCP into seasons and hold auctions much closer to each CCP. This year, FERC approved a three-year delay of the next capacity auction to give ISO-NE time to develop these changes with the goal of implementing them for FCA 19. (See FERC Approves Additional Delay of ISO-NE FCA 19.) 

ISO-NE’s filing of the results spurred opposition from climate activists, who argued the auction was biased in favor of fossil fuel resources. (See Climate Activists Urge FERC to Reject Results of ISO-NE FCA 18.) 

“These results are in violation of ISO-NE’s tariff and mandate to ‘protect the health of the region’s economy and the well-being of its people by ensuring the constant availability of competitively priced wholesale electricity — today and for future generations,’” the group No Coal No Gas wrote in comments signed by more than 4,000 individuals. The group also protested the results of the three prior FCAs.  

“FCA 18’s award of nearly $350 million in forward capacity payments to fossil fuel peaker plants is a clear violation of this mission,” the organization added. “Supporting fossil fuel generators that can only provide electricity by worsening climate change and exacerbating grid instability is dangerous, irresponsible grid management.” 

Echoing its response to the protests of previous FCAs, FERC sided with ISO-NE, ruling that the structural critiques of the auction are outside the scope of the proceeding. (See FERC Accepts Results of ISO-NE FCA 17.)

The commission wrote that the protests “do not bear on the sole question here — namely, whether ISO-NE conducted FCA 18 in accordance with the requirements set forth in its tariff.” 

“Instead, these protests largely challenge the FCM design and raise various challenges related to climate change, fossil fuels, the minimum offer price rule and the Merrimack Generating Station, which are issues that are beyond the scope of the instant proceeding,” FERC said. 

FERC added that the concerns about a conflict between ISO-NE’s mission statement and the capacity market design “are more appropriately raised in the stakeholder process.” 

ISO-NE applauded FERC’s ruling, writing in a statement that “the Forward Capacity Market is and has been open to all resources able to provide capacity to the region, and claims of bias are without merit.” 

“All the new resources clearing in this year’s auction were renewable energy, battery storage or demand-reducing resources,” wrote ISO-NE spokesperson Matt Kakley. “We look forward to continuing to work with stakeholders and the New England states on longer-term changes to the capacity market.” 

Meanwhile, climate activists expressed disappointment with the decision and took issue with the commission’s suggestion that they raise their concerns within the NEPOOL stakeholder process.  

Marla Marcum of No Coal No Gas emphasized that the NEPOOL process is closed to nonmembers and that member groups representing end users have minimal voting power within the organization. 

“Referring us to a body to which we are unlikely to gain access, and which explicitly limits public input and agency, is unfortunately typical of this system — a system designed to prevent meaningful participation,” Marcum said, adding that FERC’s ruling suggests ratepayers “should have no effective way to participate in decisions about the billions of dollars taken from their utility bills every year to manage the grid.” 

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Renewable Development Faces Regulatory Tangle

Two new reports have been published on the profusion of local and state regulations affecting renewable energy development — one attempting to summarize them, the other quantifying the growing number of restrictions they impose. 

“Laws in Order: An Inventory of State Renewable Energy Siting Policies” summarizes the renewable energy siting and permitting policies in the 50 states and Puerto Rico. One of its findings is that the approach to this type of regulation can be difficult to categorize because it varies widely from one state to the next. 

“Opposition to Renewable Energy Facilities in the United States: June 2024 Edition” is an update of similar reports in 2021, 2022 and 2023. This year’s report finds 29% more contested projects nationwide than last year’s, along with 73% more local restrictions and 111% more state-level restrictions. 

List of Laws

“Laws in Order” was prepared by the Regulatory Assistance Project and Clean Air Task Force with support from the Department of Energy, Lawrence Berkeley National Laboratory and Consensus Building Institute. 

The team created an inventory of the siting and permitting policies that pertain to large-scale solar and onshore wind projects and the often-complex, layered mesh of approvals needed before construction can start. 

The report provides a summary of the findings and draws a profile for each state and is accompanied by an interactive map. It also identifies the: 

    • entities within each state or territory that make siting and permitting decisions; 
    • level of government that has the authority to set standards for large-scale renewables siting and construction;  
    • requirements for public involvement;  
    • timelines that exist; and 
    • availability of permitting guides and model ordinances designed to support local decision-making. 

A display of state-level model ordinances available to guide solar and wind power development | Regulatory Assistance Project

Illustrating the highly varied nature of regulatory oversight, the report notes that 12 states give local governments principal jurisdiction, the governments in five states and Puerto Rico hold jurisdictional authority, local and state governments share authority in six states, and oversight can fall to either the state or the local government in 27. 

List of Obstacles

“Opposition to Renewable Energy Facilities” was produced by the Sabin Center for Climate Change Law at Columbia University. 

Without making individual judgments on the hundreds of examples they cite, the authors conclude that as a whole, there is widening local opposition to renewable energy facilities that is a potentially significant barrier to achieving emission-reduction goals. 

The report looked only at restrictions so severe that they have either killed a specific project or could limit or ban development of renewables. It catalogs 395 such restrictions at the local level and 19 at the state level in 41 states. It also identifies 378 renewable projects in 47 states that have encountered significant opposition. 

Alaska was the outlier as the only state with no severe restrictions or significant controversies identified. 

Polices that bear indirectly on renewable energy facilities — such as net metering, renewable energy standards or subsidies — are not included if they do not bear directly on renewables. But the authors note local governments increasingly taking action to oppose the infrastructure needed to support renewable energy facilities, such as transmission and battery storage.

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FERC Order 1920 Sees Wide-ranging Rehearing Requests

FERC has received rehearing requests on Order 1920 ranging from stakeholders who just want to see a few tweaks, to those who prefer the commission trash the entire order and start over.

Many states filed for rehearing on the order, arguing for more authority and flexibility for their efforts to reform transmission planning and cost allocation rules that started before FERC issued its order. (See Order 1920 Rehearing Request from States Seek Bigger Role in Tx Planning.)

The only two RTOs that filed for rehearing also sought flexibility to keep going with the changes they have been working on with stakeholders. PJM seeks to continue with its Long-Term Regional Transmission Planning (LTRTP) process and SPP with its Consolidated Planning Process (CPP).

PJM’s changes would lead to a process where, working with states and other stakeholders, it could come up with scenarios based on evolving concerns such as the changing resource mix and new demand. It was designed to reflect the realities of the RTO’s region, which is “comprised of 14 jurisdictions that have public policy initiatives that are simultaneously overlapping and conflicting — while also taking into consideration the challenges the PJM region is facing as a result of the accelerating energy transition.”

The LTRTP process is meant to deal chiefly with reliability while considering states’ policy requirements in consultation with them. The rule prevents transmission providers from setting up cost allocation methods that separate out reliability, economic and public policies, but PJM said its disparate state membership means it should be exempted from that. The LTRTP process does not align with Order 1920’s requirements perfectly, and some details differ from FERC’s requirements, the RTO said.

“However, PJM believes that the PJM LTRTP process is directionally consistent with the commission’s long-term planning goals, and importantly, the process recognizes PJM’s unique needs and circumstances,” the RTO said.

SPP asked for clarification that it could move forward with a different set of rules around its CPP process.

“The CPP will include a comprehensive long-term assessment that projects supply and demand needs over a 20-year period, incorporating regional and subregional components,” the RTO said. “The CPP will allow for simultaneous planning of transmission, as opposed to the piecemeal approach SPP employs today.”

The new planning process uses a single, common base model for the entire region, it improves data collection, and SPP said it was working on a cost allocation method that would require flexibility from some of Order 1920’s requirements.

The Re-evaluation Requirement

One area transmission owners singled out for review was the requirement that transmission projects be re-evaluated after they’re picked in a regional plan under Order 1920.

It kicks in when projects are delayed long enough to impact reliability, if actual costs significantly exceed estimates, or if some underlying law or policy changes.

The Edison Electric Institute argued that section of the rule was poorly noticed, with FERC pointing to paragraph 248 in the Notice of Proposed Rulemaking. The utility trade group argued that paragraph lacked sufficient detail to count as appropriate notice under the Administrative Procedure Act.

“The onus is on the agency to inform stakeholders that it is considering a proposal put forth in comments; the onus is not on stakeholders to sift through thousands of pages of comments and respond to each one in case the agency should decide to use a particular proposal as the basis for its final rule,” EEI said.

Order 1920 largely takes MISO’s transmission planning process and sets it as the baseline for other regions to implement their own rules around, but a large group of MISO TOs argued that the re-evaluation requirement goes well beyond what they are used to in one key way: The RTO’s “variance analysis” does not require transmission lines to be re-evaluated using new benefits that have been updated since it initially was planned.

The benefit re-evaluation requirement conflicts directly “with the commission’s intended goal of shaping a regulatory environment that facilitates regional transmission development,” the MISO TOs said.

Using new benefits in the updated process creates massive uncertainty for transmission development and basically “requires re-planning every five years,” they added. That increases the risk that transmission will be removed from the plan based on entirely new inputs and assumptions, which can put at risk permits required by other regulators and could implicate projects already under construction.

“Such uncertainty also risks spooking investment in these crucially needed transmission facilities and may delay subsequent portfolios of long-term regional transmission facilities as the resources that would otherwise be used in their development will be used to re-evaluate past portfolios,” the TOs said.

The WIRES Group also told FERC it should reconsider the re-evaluation requirement because it could undermine, by delay or cancellation, the development and timely completion of long-term regional transmission facilities.

Rights of First Refusal

Both WIRES and EEI had the re-imposition of rights of first refusal as a major goal for the order, and FERC did that with projects “right-sized” from the local planning process into the regional planning process, but neither of them brought up the issue in their rehearing filings.

The right-sized ROFR did come under fire from the Electricity Transmission Competition Coalition, the Resale Power Group of Iowa and LS Power Grid.

“Competition in the transmission planning process for the right to develop and construct new transmission facilities reduces costs to consumers and drives efficiencies in project construction,” ETCC said. “The Competition Coalition supports competition and competitive prices to maintain just and reasonable transmission rates, consistent with Order No. 1000’s pro-competition directives.”

Giving incumbent owners a ROFR over transmission projects elevated out of the local planning process was meant to deal with what FERC said were infirmities in those processes. But the rule change is not based on any finding that the current regional planning processes are unjust and unreasonable.

“Nevertheless, in its declaration that [Federal Power Act] Section 206 allows it to act, Order No. 1920 seems to take the position” that it can modify any tariff provision regardless of whether it was found to be is just and reasonable, ETCC said. “There is no statutory or judicial support for such a broad reading of the requirement under the first prong of Section 206 of the Federal Power Act.”

Environmentalists Want Stronger Requirements

A joint filing from “public interest organizations” — including the Environmental Defense Fund, the Environmental Law & Policy Center, the Natural Resources Defense Council, the Sierra Club and the Sustainable FERC project — said they support the general direction of the order and FERC’s goal to efficiently expand the grid.

Order 1920’s changes “represent the lynchpin of the commission’s multi-proceeding reform effort,” and they “applaud the commission’s extensive stakeholder engagement and thoughtful consideration of the nearly 17,000 pages of comments from nearly 200 diverse parties,” the environmentalists said.

But the commission should issue firmer mandates to get around the “inherent economic incentives of transmission providers (and their generation owners)” that lead them to avoid building out transmission to preserve local market power, they argued. FERC should specifically require that transmission planners must plan around access to cheaper generation and cannot discount that benefit.

Clean Energy Trade Groups Request Tweaks

Advanced Energy United, the American Clean Power Association, American Council on Renewable Energy and Solar Energy Industries Association — filing as the “Clean Energy Associations” — supported most of the order, but they filed a request seeking a handful of changes.

The commission was wrong to include interconnection-related upgrades in the short-term process and the new 20-year LTRTP process envisioned in Order 1920, they said. The commission also should change the order by eliminating a requirement that those network upgrades meet minimum voltage thresholds, as its rationale was ambiguous on how transmission providers must determine network upgrades for inclusion in the regional plans, they argued.

The rationale for leaving network upgrades in the short-term plans that still will be run under the Order 1000 process is that they need to be built soon under generators’ interconnection timelines.

“However, the Clean Energy Associations respectfully submit that near-term progress and long-term progress in this area are not mutually exclusive and should be pursued in parallel,” they argued.

Harvard Electricity Law Initiative Backs State Cost Allocation Rights

FERC decided against requiring transmission providers to file state agreements on cost allocation because of the precedent set when Atlantic City Electric sued it over related issues.

But Harvard Law School’s Electricity Law Initiative argued that case applies only to utility filing rights under FPA Section 205. FERC still could make it a requirement under Section 206; not doing that effectively expands Atlantic City’s legal impact.

“Atlantic City does not prevent the commission from amending the pro forma OATT to include a process for filing all regional cost allocation methods approved by relevant state entities, regardless of the transmission provider’s approval,” the Harvard group said. “Imposing a process for filing relevant state entities’ cost allocation methods would not ‘deny [utilities] their right to unilaterally file rate and term changes.’”

The new process would supplement the existing cost allocation processes, whether held by TOs or RTOs. Giving states a guarantee that their work will be given at least a review by the commission would be a marked improvement over what the rule contemplates: states gathering to come up with ideas that the RTO or utilities can reject to use their own cost allocation method instead.

“State regulators might prefer to forgo this process entirely in order to avoid bargaining in the shadow of transmission providers’ veto authority,” the Harvard initiative said. “By placing transmission providers above state officials, the final rule grants utilities leverage over their regulators, potentially interfering with regulators’ duties under state law.”

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Vermont Heating Fuel Sales Decreasing in Recent Years

Vermonters are using less fossil fuel for heat in recent years, partly because winters have been trending warmer but also because more buildings are relying on electric heat pumps. 

The Energy Action Network lays out the data in a new report showing heating fuel sales lower than the previous year in four of the five years from 2019 through 2023. 

The total decrease from 2018 to 2023 was 12% as measured by Btu, and that came even as the state’s residential housing stock expanded by 2.7%. 

Meanwhile, annual heating degree days (HDD) were 8% lower in 2023 than in 2018.  

And the heat pump count climbed sharply each year during that period, from 12,834 in 2018 to 64,617 in 2023. 

Installation of heat pumps has been rising steadily in Vermont over the past six years. | Energy Action Network

The Energy Action Network, which unites more than 200 organizations working to achieve Vermont’s climate and energy goals, said the warmer winters are the largest factor in the declining use of heating fuel. The authors calculated the impact of weather at about 50% of the total reduction. 

Vermont has a longer and colder heating season than most states, and while its annual HDD total has ranged from fewer than 7,000 to more than 8,000 over the past 33 years, a warming trend has been observed. 

“Several other factors likely played a role, including increased adoption of electrification, efficiency and other pollution reduction measures,” the authors wrote in the May 2024 report. Largest among those would be high-efficiency heat pumps, which EAN estimates account for about 28% of the decrease in heating fuel sales. 

That decrease was not uniform. 

Fuel oil and kerosene sales were down 22.2% from 2018 to 2023, but fossil gas sales decreased only 9% and propane sales increased 4.3%. 

Some factors are hard to quantify — for example, the authors made no attempt to estimate how many people in the heavily forested state increased the amount of wood they burned or turned down their thermostats in attempts to economize as fossil fuel prices soared. But they saw no decrease in the quantity of fuel sold as prices rose and no decrease in sales as prices fell. 

They estimated smaller impacts on fossil heating fuel sales from installation of higher-efficiency residential fossil-burning equipment (7% of the total), residential weatherization (5%) and wider use of heat pump hot water heaters (3%). 

The report warns against Vermont relying on a continued warming trend to meet its climate goals. 

“To be less dependent on the whims of weather — so that we are not counting on record-breaking warm winters to meet thermal sector emissions reduction targets — more concerted efforts to help customers install and properly operate heat pumps for both space and water heating and complete weatherization projects will be necessary to achieve more predictable and durable emissions reductions,” the authors write. 

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ERCOT Board Chair Foster Steps Down

Paul Foster, who chaired ERCOT’s first Board of Directors under rules established in the aftermath of 2021’s disastrous winter storm, announced June 18 that he is stepping down from the position. 

Vice Chair Bill Flores will replace Foster on an interim basis, effective June 20. 

Foster said he had been thinking about leaving when his term expired this year. However, he said a recent discussion with Texas Gov. Greg Abbott (R), who plays a role in selecting ERCOT’s board members, hastened his decision. 

“It became clear to me it’d be much more beneficial to the board and to ERCOT for this transition to happen sooner rather than later,” Foster told the board. “ERCOT has a tremendous amount of work to do in the last half of 2024 leading into a legislative session. … The board has a lot of work to do, shaping and supporting these efforts. Having a new board chair and a new board member in place as soon as possible and well in advance of the legislative session is what would be best for ERCOT.” 

The Texas Legislature meets biennially. Its 90th session begins next January, with legislators expected to probe ERCOT’s market changes and performance.  

Foster was appointed as chair in October 2021 as one of the revamped board’s first two independent directors. The previous board’s members, six of whom did not live in Texas, resigned under pressure after Winter Storm Uri brought the grid within minutes of a total collapse. (See Two New ERCOT Directors Named, Replacing Current Board.) 

Legislation passed after the storm now requires board members to be Texans and independent of the ERCOT market, and have executive-level experience in several disciplines. A three-person board-selection committee appointed by the governor and the state’s other two political leaders is responsible for picking board members. 

Foster is president of Franklin Mountain Investment and founder of Western Refining. An El Paso philanthropist, he has been renovating a third downtown building in his hometown. 

“When I took this job, I had only a very high-level understanding of the grid and the market,” Foster said. “What I’ve come to learn in my tenure as chair is that this is the most dynamic, innovative, adaptive and forward-looking electric grid and competitive market in the world. Texas and ERCOT are at the forefront in the global energy transfer transformation that is currently taking place … and frankly, I think we’re handling it better than just about anybody else.” 

Foster heaped praise on ERCOT’s staff and the Public Utility Commission, which oversees the grid operator. 

“As I leave this post, I truly believe that ERCOT is headed in the right direction with the right people in leadership and poised to lead the world through the energy transformation that we’re in the middle of,” he said.

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NYISO: Prepared for Heat Dome Scorching New York

NYISO says it is prepared to meet demand during an extreme kind of heat wave called a heat dome that is already spiking temperatures to near 100 degrees Fahrenheit in western New York and is expected to spread this week throughout the state, northern New England and New Jersey. 

“Based on current conditions, … NYISO forecasts that there will be adequate supply of electricity to meet demand through the coming period of hot weather,” Aaron Markham, vice president of operations, said in a press release June 18. 

A heat dome is a high-pressure system in the upper atmosphere that traps warm air in place. Heat domes are more likely to arise in dry summer conditions. 

According to the National Weather Service, Albany, Buffalo, Rochester, Syracuse and the Plattsburgh area will likely experience “extreme heat” with little to no overnight relief beginning June 19. The heat is expected to move east and south, hitting New York City on June 20. Dangerous heat levels could persist until June 23. 

NYISO forecasts peak demand to reach as high as 28.9 GW by June 20. That is well below its forecast peak load for the season of about 31.5 GW, according to its Summer Assessment. The ISO will have about 40.7 GW of capacity available before derates, and operators could dispatch up to 3,275 MW through emergency procedures. (See NYISO Reports Adequate Capacity for Summer, but Heat Waves a Concern.) 

Kevin Lanahan, vice president of external affairs and corporate communications, told RTO Insider that based on historical load data, weather conditions and modeling software, operations and planning personnel anticipate being able to meet demand. 

“It’s a technical process, and we’ve gotten pretty good at it,” Lanahan said. “We have a lot of confidence in our planners and forecasters. We do believe we have enough power to meet demand.” 

Last year’s peak demand of 30,206 MW was during the Labor Day heat wave. The all-time record peak of 33,956 MW occurred in July 2013.  

New York Gov. Kathy Hochul announced she had activated the state’s Emergency Operations Center. “New Yorkers should take every precaution to stay cool this week,” she said. “Stay hydrated, avoid excessive outdoor activity and, if needed, visit a cooling center near you.” 

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NJ Electrification Bill Stirs Opposition

A bill that would require New Jersey utilities to offer building electrification incentive programs sparked more than two hours of heated debate June 10 as supporters cast it as a way to give consumers the option to embrace electric appliances and opponents questioned whether it would really cut emissions. 

Sen. Bob Smith, chair of the Senate Environment and Energy Committee, opened the hearing by saying the bill, S249, would be discussed but not voted on to solicit input on additional changes. He sought to head off anticipated misrepresentation of the bill by some of the witnesses. 

“Let me tell you what it is not,” he said. “The bill is not a law that’s going to mandate that tomorrow you change your electric system. Because you’re going to hear that nonsense today. … It is important to note the bill does not mandate electrification in any way.” 

The bill would direct the New Jersey Board of Public Utilities to establish a program that requires utilities to prepare and implement multiyear “beneficial” electrification plans to assist ratepayers with the transition from non-electric water heating, space heating, industrial processes or transportation equipment. The program would provide assistance if the change “reduces cost from a societal perspective, reduces greenhouse gas emissions or promotes the increased use of the electric grid in off peak hours.” 

Once the bill is enacted, the BPU would have a year to adopt program rules and regulations and set greenhouse gas emission-reductions targets. The rules would also “establish a cost recovery and performance incentive mechanism” and “develop and provide direct incentives for the installation of electric heat pumps.” 

Eric DeGesero, representing the Fuel Merchants Association of New Jersey and the New Jersey Propane Gas Association, said one problem with the bill is the phrase “beneficial electrification.” 

“Why isn’t the goal decarbonization?” he said. “Because if the goal is decarbonization, then renewable natural gas, hydrogen, renewable diesel — i.e., heating oil — [and] renewable propane would be included. They’re not. 

“It’s far more cost effective to use existing infrastructure than it is to have to retrofit. This bill doesn’t really put a thumb on the scale for electrification; it puts a whole hand on it.” 

Loose Definition

Nicholas Kikis, representing the New Jersey Apartment Association, also questioned the bill’s focus on electrification, “with this kind of very loose definition of what is beneficial, rather than focusing on those projects that would have the greatest impact, and therefore not negatively impact either housing affordability or, ultimately, our utility rates.” 

But a majority of the two-dozen speakers at the hearing backed the legislation. 

Anjuli Ramos-Busot, director of the Sierra Club’s state chapter, said that “fossil fuel equipment, such as boilers and gas furnaces inside New Jersey homes, [emits] a dangerous cocktail of harmful pollutants” and more carbon pollution than power plants in the state. The bill, by creating “effective building electrification programs, would provide a sure passage away from that,” she said. 

“It is clear that a transition from fossil fuels will save lives and protect residents’ health and wellbeing,” she said. “I’m just going to leave a very simple question to those opposed to this bill: What is so bad about more consumer choice?” 

Out-of-state Emissions

Building emissions are the second-largest source of greenhouse gases in New Jersey, after transportation, and Gov. Phil Murphy’s administration has developed a portfolio of measures to assist in the transition toward electrification. 

Murphy signed an executive order in 2023 calling for the electrification of 400,000 homes by December 2030, and more recently, the BPU on April 30 approved a package of new construction incentives worth up to $5.25 per square foot. (See NJ Enacts New Construction Electrification Incentives.) 

But the plans have faced vigorous opposition from business groups and fossil fuel representatives, who express concerns about the cost of the transition and urge the state to consider other alternative fuels, such as hydrogen and renewable natural gas, saying the existing natural gas infrastructure could be used. 

Bob Kettig, manager of corporate strategy at New Jersey Resources — which operates natural gas transportation and distribution infrastructure, as well as solar projects — said the bill focuses too narrowly on reducing “on-site emissions” and does not account for the fact that the electricity that powers the new appliances used will be generated out of state. 

The New Jersey Division of Rate Counsel urged the committee not to back S249, saying “electric utility ratepayers will shoulder the entire cost of the program.” 

“Electric distribution companies do not require any incentive to carry out electrification projects,” Director Brian Lipman wrote in a June 7 letter to the committee. “Electrification will necessarily increase electric load and therefore very likely increase revenue and profits for the EDCs.” 

Sen. Smith said he expects to amend the bill based on the points raised and will put it on the agenda for the committee’s June 20 meeting. 

Solar Recycling

The committee also considered, but eventually held, a bill, S3399, that would require end-of-life recycling of solar and photovoltaic energy generation facilities and structures. 

The legislation was one of two solar-focused bills addressed by the legislature June 10. The Senate Economic Growth Committee heard a bill, S2427, that would create a warranty program to protect solar panels erected on warehouses and other roofs. 

The recycling bill would require the owner of solar projects to remove and recycle the structure and any related equipment after its use. It would also require the New Jersey Department of Environmental Protection to set rules and standards for the program and allow fines of up to $1,000 if they were not adhered to. 

Glenn Laga, of Commercial Solar Panel Recycling, which has a solar recycling facility in California and is trying to set one up in New Jersey, said the company uses a simple recycling process. The panels are inspected and removed from the aluminum frame, and the electric boxes stripped off, before all the components go for recycling. 

Lyle Rawlings, president of the Mid-Atlantic Solar & Storage Industries Association, who said he served on the New Jersey Solar Panel Recycling Commission, said the bill should encourage operators to keep the panels for the full 35-year life. 

“We need regulations or incentives that will encourage people not to end their [facilities’] lives after 15 years or 20 years, when they still have plenty of life left,” he said, adding that the bill should also advocate for older panels to be repurposed and reused. 

Rawlings also expressed concern that when solar panels are crushed and ground down in the recycling process, they could release lead into the environment. 

Smith said he would incorporate the insights heard by the committee into the bill. 

Solar Roof Damage

The Economic Growth Committee voted 3-2 to approve S2427 over objections from two Republican senators and the Division of Rate Counsel. 

Smith, who sponsored the bill, said it addresses a “big hurdle” that is preventing more of the state’s numerous warehouse roofs from hosting solar panels: Because flat roofs are prone to leaking once a solar panel is mounted, the owners lose their insurance. 

“You lose your insurance the minute you put something on top of that roof,” he said. The bill would create a warranty program that would reimburse building owners if the property was damaged because of panels, he said. 

Sen. Joseph Pennacchio (R) questioned why the bill made the state responsible for the payments. 

“You’re talking about groups like Amazon. Why should we ask the ratepayers to foot the bill for something that, quite frankly, maybe they could do by themselves?” he said. 

Lipman said in a June letter to the committee that the bill “unfairly forces New Jersey’s ratepayers to pay for insurance that covers any mishaps in the work of solar contractors.” This “removes important incentives for those contractors to operate without causing damage,” he said. 

The bill will now be heard by the Senate Budget and Appropriations Committee.